scholarly journals Global FDI Inflow and Its Implication across Economic Income Groups

2020 ◽  
Vol 13 (11) ◽  
pp. 291
Author(s):  
Udi Joshua ◽  
Mathew Ekundayo Rotimi ◽  
Samuel Asumadu Sarkodie
Keyword(s):  
Economic Growth ◽  
Fixed Effects ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Income Group ◽  
Ordinary Least Squares ◽  
Business Environment ◽  
Positive Influence ◽  
Panel Estimation ◽  
The Impact

Foreign direct investment (FDI) as a driver of growth is important in today’s globalized economy. It is extremely difficult for economies to grow sustainably without economic interactions outside their borders. However, there has been a debate on the impact of FDI inflow on economic expansion. Hence, this study investigated the influence of FDI on economic growth for a selection of 200 economies around the world for the period 1990–2018. We subdivided the sample into World Bank income group clusters to aid comparison across income blocs. The study employed panel estimation techniques including pooled ordinary least squares (POLS), dynamic panel estimation with fixed-effects and random-effects and generalized method of moments (GMM). The study found that FDI, debt stock and official development assistance are promoters of growth in the selected countries—although debt stock weakly impacts economic growth. In contrast, trade openness and exchange rates had a mixed (negative and positive) influence on economic growth. The study suggests that the creation of a conducive business environment and economic policies will attract FDI inflows. Additionally, borrowing from external sources could be minimized despite its perceived positive influence on growth to achieve financial independence.

scholarly journals Institutional Quality and Economic Performance in the Southern African Development Community (SADC) Region: A Dynamic Panel Analysis

2021 ◽  
Vol 10 (2) ◽  
pp. 294-315
Author(s):  
Kholiswa Malindini ◽  
Keyword(s):  
Economic Growth ◽  
Economic Performance ◽  
Fixed Effects ◽  
Institutional Environment ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Domestic Investment ◽  
Governance Index ◽  
The Impact

The quality of institutions has increasingly become a key determinant of economic performance. This confirms a paradigm shift from the conventional macroeconomic determinants to governance as the crucial determining factor of economic performance, particularly in developing countries where economic growth is stagnant or moving at a meagre rate. With the aid of macroeconomic and governance data, this paper reports on an empirical analysis performed to quantify the impact of institutional quality on economic performance in Southern African economies over the period 2009-2019 by employing Generalized Method of Moments (GMM) technique with fixed effects. The empirical results indicate a negative and statistically significant coefficient for the governance index, inflation, and natural resources towards GDP growth. In contrast, trade openness, financial development, and domestic investment have positive and statistically significant coefficients. Based on the composite governance index, these results suggest that a weak institutional environment that aggravates corruption levels causes instability while also stimulating rent-seeking behaviour, which ultimately stifles economic performance in the region. Therefore, to attain inclusive and sustainable economic growth rates, the regional authorities should strengthen the law and enforce the rules.

scholarly journals Impact of foreign direct investment on economic growth in the world during 1975–2015

2018 ◽  
Vol 20 (91) ◽  
pp. 28-32
Author(s):  
B. B. Brychka
Keyword(s):  
Economic Growth ◽  
Literature Review ◽  
Regression Models ◽  
Trade Openness ◽  
Positive Influence ◽  
Linear Regression Models ◽  
Average Value ◽  
Gdp Growth Rate ◽  
The World ◽  
The Impact

The study is concentrated on examination the impact of FDI on economic growth in the World during 1975–2015. The study consists of four consecutive parts, including introduction, literature review, model and methodology, data, empirical results and conclusion. Each part of the study is focused on its own goals. According to the results of the literature review, there is positive influence of FDI on economic growth in various countries. Economic growth is one of the most important goals of any country. The country image on the international level is dependent on its economic power. Economic growth provides an opportunity to improve the living standards in the country. Most researchers conclude that there is a positive influence of FDI on the countries’ economic growth. However, the impact of FDI is strong in developing countries. Moreover, this relationship is stronger in countries with higher educational and technological level, trade openness and development of the countries’ stock markets. Economists often build regression models to estimate the relationship between the variables. In order to find the impact of FDI on economic growth, we are going to apply linear regression models. We take two variables as indicators of the countries’ economic growth, including current GDP expressed in U.S dollars, and annual GDP growth rate. Taking into account that the World’s GDP in current U.S dollar is a factor variable with the mentioned resulting variables, the regression equation looks as follows: The R-squared of the built model is 0.99, indicating that roughly 100% of changes in the World’s GDP is caused by the chosen factors. As it is seen from the SAS output, the residuals of dependent variable and factors variables are distributed normally among its average value. Thus, non-normality is not observed in the model. Taking into account the coefficients of the factor variables, the log GDP is most sensitive to the changes in trade as a percent of GDP. The log GDP is not quite sensitive to the changes in FDI, since the coefficient of 0.000128 means that increasing of FDI by one unit increase the logarithmic value of GDP by $ 0.000128.

scholarly journals The Impact of Industrialization, Trade Openness, Financial Development, and Energy Consumption on Economic Growth in Indonesia

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 174
Author(s):  
Khalid Eltayeb Elfaki ◽  
Rossanto Dwi Handoyo ◽  
Kabiru Hannafi Ibrahim
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Least Squares ◽  
Financial Development ◽  
Correction Term ◽  
Trade Openness ◽  
Ordinary Least Squares ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

This study aimed to scrutinize the impact of financial development, energy consumption, industrialization, and trade openness on economic growth in Indonesia over the period 1984–2018. To do so, the study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, fully modified ordinary least squares (FMOLS), dynamic least squares (DOLS), and canonical cointegrating regression (CCR) were used for a more robust examination of the empirical findings. The result of cointegration confirms the presence of cointegration among the variables. Findings from the ARDL indicate that industrialization, energy consumption, and financial development (measured by domestic credit) positively influence economic growth in the long run. However, financial development (measured by money supply) and trade openness demonstrate a negative effect on economic growth. The positive nexus among industrialization, financial development, energy consumption, and economic growth explains that these variables were stimulating growth in Indonesia. The error correction term indicates a 68% annual adjustment from any deviation in the previous period’s long-run equilibrium economic growth. These findings provide a strong testimony that industrialization and financial development are key to sustained long-run economic growth in Indonesia.

Shadow Economy, Corruption, and Economic Growth: An Empirical Analysis

2019 ◽  
Vol 47 (3) ◽  
pp. 276-294 ◽  
Author(s):  
Nedra Baklouti ◽  
Younes Boujelbene
Keyword(s):  
Economic Growth ◽  
Least Squares ◽  
Public Administration ◽  
Method Of Moments ◽  
Fixed Effects ◽  
Shadow Economy ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Negative Effects ◽  
Considerable Debate

There is considerable debate over the effects of both corruption and shadow economy on growth, but few studies have considered how the interaction between them might affect economic growth. We study how corruption levels in public administration affect economic growth and how this effect depends on the shadow economy. Using Ordinary Least Squares (OLS), fixed effects, and system generalized method of moments (GMM) on a dataset of 34 OECD countries over the period 1995-2014. The estimation results indicate that increased corruption and a larger shadow economy lead to decrease in economic growth. Results additionally indicate that the shadow economy magnifies the effect of corruption on economic growth. These results imply significant complementarities between corruption and the shadow economy, suggesting that the reduction of corruption will lead to a fall in the size of the shadow economy and will also reduce the negative effects of corruption on economic growth through the underground economy.

scholarly journals Effect of Money Supply on Economic Growth: A Comparative Study of Nigeria and Ghana

2019 ◽  
Vol 7 (3) ◽  
pp. 16
Author(s):  
Cordelia Onyinyechi Omodero
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Negative Impact ◽  
Ordinary Least Squares ◽  
Negative Influence ◽  
Positive Influence ◽  
Least Squares Regression ◽  
Monetary Authorities ◽  
Significant Negative Impact ◽  
The Impact

The effect of money supply in enhancing economic growth in Nigeria and Ghana is investigated in this study. The major objectives of the study are to establish the joint and individual influences of money supply mechanisms on economic growth in Nigeria and Ghana. The study employs data from 2009 to 2018 and uses Ordinary Least Squares regression technique for analysis of the data. The findings reveal that broad money supply (M2) has an insignificant negative influence on RGDP in Nigeria, but in Ghana the impact is significant and positive. Broad money supply (M3) exerts insignificant positive influence on RGDP in Nigeria, but significant negative impact on RGDP in Ghana while credit to private sectors (CPS) has insignificant positive influence on RGDP in both Nigeria and Ghana. The study among others suggests that the Monetary Authorities in the two countries should come up with monetary policy strategies that will help drive the economy better and such policies should consider M2 and CPS more as their contributions are necessary for economic expansion that lead to more output and employment.

scholarly journals The Determinants of Economic Growth in CEMAC through a Panel Data Approach

2016 ◽  
Vol 4 (2) ◽  
pp. 483
Author(s):  
Nzingoula Gildas Crepin
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Fixed Effects ◽  
Good Governance ◽  
Generalized Method Of Moments ◽  
Central Africa ◽  
Ordinary Least Squares ◽  
Fixed Effects Model ◽  
Main Determinants ◽  
Determinants Of Economic Growth

<div><p><em>This article highlights through a panel data approach the determinants of economic growth; observed over the last decade in the Economic and Monetary Community of Central Africa (CEMAC) and necessary to reach emerging economies stage. To do this, we essentially used Stata 12 software to come up with the results, and a panel data sample comprising six CEMAC member states, namely Congo, Cameroon, Gabon, Equatorial Guinea, Central African Republic and Chad, for the period ranging from 2000 to 2013. The results obtained after estimating ordinary least squares, fixed effects model, random effects model, generalized method of moments (GMM) and specification tests show that the best model to estimate these types of data is the fixed effects model. Besides, the main determinants of economic growth in CEMAC over that period are Foreign Direct Investment (FDI) and loans lending to the economy (LOAN). After estimation, FDI is found positive and significant on economic growth, while LOAN is significant and found negative maybe due to lack of good governance.</em></p></div>

scholarly journals Trade Openness and Economic Growth in Indonesia

2020 ◽  
Vol 10 (2) ◽  
pp. 163-170
Author(s):  
Khoirul Ifa ◽  
Moh. Yahdi
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Time Series Data ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Series Data ◽  
Test Results ◽  
Rapid Economic Growth ◽  
The Impact

Economic growth and international trade are related to one another. International trade stimulates long-term economic growth. The more trade activities in a country, the more rapid economic growth; this trade is a key component of development in a country, its contribution is felt with the increasing economic growth in several countries. The purpose of this study looks at the impact of trade openness on economic growth in Indonesia in 1986-2017. This research is a quantitative study using time series data from 1986-2017, research data obtained from the world bank, data analysis techniques using the GMM method to see the impact of trade openness on economic growth. The test results using the Generalized Method of Moments analysis method show that all variables significantly influence the dynamics of economic growth in Indonesia. This result is proven by the t-statistic probability value, which shows a smaller value compared to the t-table value. Then the value also has a probability of less than α. It can be concluded that the variables of trade, FDI, inflation, and the number of workers have a significant effect on economic growth in Indonesia.

scholarly journals Impact of institutional factors on economic growth in the United States in the years 1979–2007

2015 ◽  
Vol 6 (1) ◽  
pp. 137 ◽  
Author(s):  
Dorota Kuder
Keyword(s):  
United States ◽  
Economic Growth ◽  
The United States ◽  
Business Environment ◽  
Positive Influence ◽  
Institutional Factors ◽  
Working Population ◽  
Proportional Increase ◽  
The Impact ◽  
The U.S

The purpose of this article is to isolate and determine the importance of institutional arrangements in shaping the dynamics of the U.S. GDP in the years 1979–2007. The research hypothesis which has been verified here can be summarized as follows: institutions in the U.S. economy have a positive influence on economic growth through a significant impact on improving the business environment. Having regard to the division of the economy into institutional areas: economic system, labor market, financial market, education and R&D, the author selected these institutional factors which indicated that the operation could be important for the process of economic growth in the United States, and then measured the impact in the years 1979–2007. To verify the thesis about the impact of institutions on economic growth the author used one of the most popular tools in this kind of econometric research – the multiple regression analysis. The analysis revealed that during the period of all the analyzed institutional factors it was the proportion of the working population and the degree of unionization that most strongly influenced the economic growth of the United States – an increase in one of these factors was associated with a much more than proportional increase in the rate of the economic growth.

scholarly journals Effect of macroeconomic variables on systemic risk: Evidence from Vietnamese economy

2021 ◽  
Vol 10 (3) ◽  
pp. 217-228
Author(s):  
Thi Xuan Huong Tram ◽  
Nguyen Thi Thanh Hoai
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Interest Rate ◽  
Interest Rates ◽  
Systemic Risk ◽  
Fixed Effects ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Negative Relationship ◽  
Ordinary Least Squares

This paper aims to find out the relationship between systemic risk in Vietnam and the effects of macroeconomic factors, including exchange rate, interest rates, and economic growth. We collect data from the Vietnamese stock market, specifically 29 listed financial firms (banks, insurance companies, and securities firms) for the period 2010-2018. The analysis is performed in two steps including systematic risk measurement in Vietnam based on the Systemic Expected Shortfall (SES) method and providing evidence from analysis related to the risk determinants assessment. Besides ordinary least squares (OLS) methods, we make use of fixed-effects (FEM) estimations, random-effects (REM) estimations, and system generalized method of moments (SGMM). The empirical evidence in this paper indicates that economic growth has a negative relationship on systemic risk in Vietnam while the exchange rate has a positive impact on systemic risk, and the interest rate has a negative relationship on systemic risk in Vietnam. Future studies can address the effects of interest rate on systemic risk during this period.

scholarly journals On the determinants of trade openness in low- and lower–middle-income countries in Africa: how important is economic growth?

2019 ◽  
Vol 5 (1) ◽  
Author(s):  
Dennis Boahene Osei ◽  
Yakubu Awudu Sare ◽  
Muazu Ibrahim
Keyword(s):  
Economic Growth ◽  
Low Income ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Low Income Countries ◽  
Special Focus ◽  
Middle Income ◽  
Middle Income Countries ◽  
Real Gdp Per Capita ◽  
The Impact

AbstractThe existing literature highlights the determinants of trade openness with disregard to the income classifications of countries in examining whether the determinants differ given their income levels. This study, therefore, re-examines the drivers of trade openness in Africa relying on panel data with special focus on the role of economic growth. More specifically, we perform a comparative analysis of the factors influencing trade openness for low-income and lower–middle-income countries using the system generalized method of moments. Our findings suggest that, while economic growth robustly enhances openness in low-income countries, in the case of lower–middle-income countries, the impact is not robust and largely negative suggesting that higher growth is associated with less openness. We also find that, economic growth–openness nexus for the lower-income countries exhibits non-linearities and inverted U-shaped relationship in particular. Thus, while increases in real GDP per capita enhance openness, beyond an estimated threshold point, any increases in economic growth dampen openness. We discuss key implications for policy.

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